NNPCL CEO SAYS STATE-OWNED REFINERIES OPERATED AT “MONUMENTAL LOSS”, OPERATIONS HALTED TO STOP FINANCIAL DAMAGE

The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Bayo Ojulari, has disclosed that Nigeria’s state-owned refineries were operating at what he described as a “monumental loss,” prompting his management team to halt operations to prevent further financial damage to the country.

Ojulari made the revelation on Wednesday in Abuja during a fireside chat titled “Securing Nigeria’s Energy Future” at the Nigeria International Energy Summit 2026, where he gave a blunt assessment of the operational and commercial realities facing the nation’s refining assets.

He acknowledged the frustration of Nigerians over the performance of the refineries, noting that the anger was justified given the enormous public funds invested in them over the years.

“On the refineries, Nigerians were angry. A lot of money has been spent, and expectations were very high. So we were under extreme pressure,” Ojulari said.

Nigeria operates four state-owned refineries located in Port Harcourt (two plants), Warri and Kaduna. Despite consuming billions of dollars in rehabilitation and turnaround maintenance costs over several decades, the facilities have failed to achieve sustained output.

Ojulari admitted that refining was not his area of expertise when he assumed office, having spent most of his career in the upstream oil sector.

“My background is upstream, so I was on a vertical learning curve. You are accountable, so you must learn very quickly. Otherwise, there is no escape,” he stated.

According to him, accountability required a rapid and honest assessment of the refineries once his management team settled into office.

Ojulari said a detailed operational review quickly revealed the true financial condition of the refineries.

“The first thing that became clear, and I want to say this very clearly, is that we were running at a monumental loss to Nigeria. We were just wasting money,” he said.

He explained that crude oil cargoes were being fed into the refineries monthly, yet utilisation levels hovered between 50 and 55 per cent, resulting in significant value erosion.

“We were spending a lot of money on operations, a lot of money on contractors. But when you look at the net, we were just leaking away value,” he noted.

More concerning, Ojulari said, was the lack of a clear pathway to financial recovery.

“Sometimes you make a loss during investment, but you have a line of sight to recovery. That line of sight was not clear here,” he added.

This, he explained, made continued refinery operations economically unjustifiable.

Ojulari revealed that halting refinery operations was one of the first major decisions taken by his administration.

“We decided to stop the refinery and do a quick check. We planned that if things were lined up, we would reopen and work on them,” he said.

He noted that shutting down the facilities was necessary to prevent further losses while reassessing their technical and commercial viability.

The NNPCL chief also disclosed that part of the losses was linked to the quality of products being produced, citing the Port Harcourt Refinery as an example.

“The crude we were taking into Port Harcourt was producing mid-grade products. When you aggregate their value compared to what you put in, it was a waste,” he explained.

Ojulari acknowledged that the decision to halt operations was politically sensitive, given longstanding pressure on NNPC to keep the refineries running to ensure domestic fuel supply.

“There were political pressures to keep the refinery product, lots of pressure. But when you have been trained for over 35 years to focus on commerciality and profitability, you can’t sleep with that,” he said.

For decades, Nigeria’s refineries have operated far below capacity, at times recording single-digit utilisation or shutting down completely, forcing Africa’s largest oil producer to rely heavily on imported refined petroleum products.

Between 2015 and 2023, successive administrations approved multiple rehabilitation contracts worth billions of dollars, yet domestic refining output remained negligible, fueling public scrutiny of NNPC’s efficiency.

Ojulari’s remarks represent one of the most candid acknowledgements by an NNPCL chief executive that continued refinery operations under existing conditions were economically unsustainable, signalling a shift toward stricter commercial discipline under the Petroleum Industry Act, even in politically sensitive areas such as domestic refining.